Archive for the ‘Financing’ Category

• Jan 6

  3 Ways to Get the Best Interest Rate on Your Mortgage

  If you’re buying a house this season, you’re in luck. Due to the sagging market, lenders are giving new homeowners lower mortgage rates than they have for the past 10 years. However, you’re going to need to do more than just show up to a lender’s office if you want to minimize your interest. Before meeting with your loan officer, make sure that you’ve taken these three steps to strengthen your portfolio.

  1)    Pay off all of your debts. Your credit score is the most important factor in determining the interest rate your lender will offer you. Don’t even bother applying for a mortgage until the majority of your credit card debts and other loans are paid off. Believe it or not, a 40-point ding on your credit score can result in a 1% higher interest rate on your mortgage. That can mean a house that costs you $20,000 more than it would have otherwise.

  2)    Explore different lenders. A good rule of thumb when looking for a home loan is to meet with five different lenders before accepting an offer. Exploring different options will give you some leverage when meeting with a loan officer. After all, if one financer offers you a good interest rate, the other ones you visit are likely to match it.

  3)    Get a fixed-rate mortgage. Adjustable rate mortgages might seem like better deals at first, but their variable interest rates will always cost you more in the long run. Unless you’re planning on selling a house within five years of moving into it, you should always, always, always get a fixed-rate loan. Fixed interest rates seem higher at first, but those rates will stay the same throughout the entire period of the mortgage.

  The two keys to securing a good interest rate on your mortgage are presentation and competition. You want to present yourself as a reliable and trustworthy applicant while encouraging different lenders to compete for your mortgage. If you remember these two key things when buying a house, you can be sure to get a great offer for your home loan.

  Tags: buying a house, mortgage
  Posted in Financing | No Comments »

• Jan 2

  Want to Pay Less for Your House? Refinance Your Mortgage.

  If you want to save some real money this holiday season, why not give yourself the gift of a home loan modification? In this buyer’s market, refinancing your mortgage can save you tens of thousands of dollars on your interest, and it can even reduce the period of your loan by five or more years. Here are a few ways you can adjust your mortgage to best work for you:

  • Lower your interest. If you originally took an adjustable rate mortgage on your home and aren’t planning on moving any time soon, it pays to refinance and opt instead for a lower-interest fixed-rate mortgage. By renegotiating your 6% interest ARM to a 5.5% fixed-rate home loan, you can save more than $100,000 in interest over a 15-year period.
  • Shorten your period. With defaults on home loans at an all-time high, the number-one priority for lenders is getting back the money they lent you. They’re often willing to give up a few years of interest in order to shorten the period on your mortgage, and this is always in your best interest if you’ve got the income to handle it. While shortening your loan’s period might increase your monthly payments, it will save you thousands on interest in the long run.

   

  • Turn your equity into a cash out. Your equity is the difference between what your home is worth and how much you’ve got left to pay. If you undergo a home loan modification for an amount greater than what you still owe on the home, you can “cash out” on part of your equity. This means you’ll get a sum of money in exchange for receiving less cash when you sell the home. This is a good idea if you want to build an addition or start a college fund for your child. This is not a good idea if you need the cash to pay off unsecured debts, like credit cards.

   

  The weak housing market has given homeowners a variety of home loan modifications to choose from. By refinancing your mortgage, you can pay less for your house, pay off your house faster or even cash out on part of its value. If you want to know more about these modifications, contact your loan officer today.

  Tags: home loan modification, mortgage
  Posted in Financing, Home Buying | No Comments »

• Dec 23

  3 Tips for Mortgage Shopping

  A home mortgage is an expense you’ll be paying off for some time. Yet plenty of people who are buying a home rush into their purchase without any preparation. You may think all lenders are the same or that you’re lucky to receive a loan. This mentality obscures the real issue: like any other purchase, you can find deals on home loans if you know how to look. Here’s what to keep in mind when mortgage shopping.

  1. Shop around. Rates and options vary significantly between different lenders. Pick several lenders and evaluate the rates and packages they offer. Ask a potential lender to give you hard numbers on a 15- or 30-year mortgage (or whatever time span you’re looking at), or use a web-based mortgage rate comparison tool. Compare each lender’s offer and keep an open mind about the long-term savings each type of mortgage offers.

  2. Look for down payment help. If you’re interested in buying a home but have little in the way of savings for a down payment, help may be available. Explore options offered by the federal government for those without the cash to afford a typical 10% down payment. The Federal Housing Administration offers much lower down payments for those with good credit. Other federal bodies, like the Department of Agriculture, also offer help for certain types of properties.

  3. Don’t be afraid to ask for help. Take advantage of your personal and professional networks when buying a home. Ask anyone in finance for advice on the particulars of your mortgage. Also, talk to people who have paid off a mortgage or recently purchased one. These people are full of valuable advice that can make your mortgage-buying process much easier.

  View a mortgage as a purchase, not a loan. When you treat your mortgage as a commodity, your inner deal hunter is likely to appear, and you’ll be more sharply focused on competitive pricing. With just a little work before you buy, you’ll enjoy significant savings.

  Tags: buying a home, home mortgage
  Posted in Financing | No Comments »

• Dec 14

  3 Reasons Why You Should Consider a Home Loan Modification

  It’s a buyer’s market right now, which means that it’s a perfect time for people who have bought a home in the past 10 years to refinance their mortgage. While many people are put off by the idea of refinancing, undergoing a home loan modification now could save you thousands of dollars in the future. If one of the following scenarios is true for you, a home loan modification could make sense.

  1)    You’re having trouble making your payments. If you’re struggling to keep up with your mortgage payments every month, a home loan modification is definitely a good idea. By renegotiating your mortgage you can extend the term of your loan in exchange for lower monthly payments. It will take you longer to pay off your real estate investment, but eliminating the chance of foreclosure is always worth an extra few years of debt.

  2)    You plan on living in your house for a while. People who don’t plan on living in a house for a long time will often get an adjustable-rate mortgage (ARM) because of the reduced down payment and lower initial interest rates. While this is typically a good idea, if you have an ARM and decide to live your house longer than you initially planned, you should modify your home loan to a fixed-rate mortgage. While the term on a fixed-rate mortgage is typically longer than the term on an ARM, they have much lower interest rates overall. If you keep up with your mortgage payments, then you’ll end up saving money in the long run.

  3)    You want to pay off your house faster. If you recently received a promotion or a substantial amount of money from an inheritance or contest winnings, then a home loan modification is the key to paying off your house faster. By increasing the amount of your monthly payments, you can lower your interest rates and shorten the term of your loan by as much as 10 years.

  In the current economy, your lender should be more than willing to renegotiate your home loan. Even if you’re falling behind on your payments, a lender would rather refinance your mortgage to lower the payments than to go through the hassle of trying to collect your unpaid debt. If any of these three conditions apply to you, contact your mortgage broker today to discuss how a home loan modification can help you achieve your financial goals.

  Tags: home loan modification, mortgage
  Posted in Financing | No Comments »

• Dec 9

  3 Ways to Survive a Foreclosure

  When your lender decides to foreclose on your home, it’s easy to feel like the world is ending – but a foreclosure doesn’t mean that you’ll never be eligible for a mortgage again. There are plenty of steps that you can take to get back on the right financial track, if you’re willing to work hard enough. Here are three things you can do now.

  1)    Understand your rights. Although your lender will hound you to pay your mortgage even after they foreclose on your house, they can only pursue your debt within the bounds of the law. Under the Fair Debt Collection Practices Act, a lender isn’t allowed to call your house outside of business hours, inform your employers of your debt or otherwise harass you into paying. If they try any of these underhanded tactics on you, find a lawyer and take them to court.

  2)    Use your credit cards. If you still have credit cards open after your foreclosure, then you should make sure to use them as often as possible. You might not have much money, but spending a little and paying it off in full every month will help pull your credit rating out of the well. If you use the cards responsibly – in other words, if you don’t carry a balance – your credit rating will improve markedly after the foreclosure on your credit score expires.

  3)    Hound your lender to clear your credit score. In some cases, harassing a lender as much as they harass you can be a good thing. If you call, send emails and write letters to your lender every day demanding that they remove your foreclosure from your credit score, you might bug them enough that they’ll clear your credit rating just to get rid of you. Remember, though, that if you’re going to try this, it’s important to stay within the boundaries of the law – just one overzealous message could land you in court.

  Surviving a foreclosure isn’t easy, but it isn’t impossible either. After seven years your foreclosure will be removed from your credit score, so use the time wisely to build up a solid credit rating through responsible credit card use, and don’t be afraid to sue your lender if their collection practices start getting unethical.

  Tags: foreclosure, mortgage
  Posted in Financing | No Comments »

• Nov 20

  How to Handle Adjustable Rate Mortgages

  While the low initial interest of an adjustable-rate mortgage can attract many first-time homeowners, the rising interest rates often sound easier to cope with than they actually are. If you’re stuck in a mortgage with steadily increasing interest, here are a few financial maneuvers you can use to keep your family sane and secure:

  • Start a cushion account. Although you can’t control how much your mortgage interest rates will rise and fall, you can at least make sure that you’ll be able to make your monthly payments on time by stashing a portion of your paycheck in a savings account every two weeks. This way, you’ll have a cushion in case the prime index rate jumps unexpectedly. And if you’ve still got money left over at the end of the year, you can absorb it into your general savings or checking account.

   

  • Plan ahead. If you look at the trends in the prime index rate that your mortgage uses (take a look at the past few years), you’ll be able to get a good idea of which direction your interest is heading in the future. If you have trouble analyzing the data yourself, you can always search the Internet for economists’ predictions. Planning ahead will make it easier to keep the money on hand to cover your increased monthly payments.

   

  • Refinance your mortgage. With foreclosures at an all-time high, banks are looking for strategies to get homeowners to pay their mortgage consistently. For many homeowners, this means refinancing an adjustable-rate mortgage, turning it into a fixed-rate mortgage instead. If you’ve got equity in your home and the fixed period of your ARM isn’t up yet, you’re an especially good candidate for a fixed-rate mortgage. However, you should be aware that this move likely means that you’ll have to stay with your real estate investment for a few more years before you’re able to sell it.

  In the current buyer’s market, an ARM might actually be more affordable than a fixed-rate mortgage. But if you’re uncomfortable with the shifting interest rates, now is a perfect time to modify or refinance your loan in order to extend your fixed-rate period.

  Tags: mortgage, real estate investment
  Posted in Financing | No Comments »

• Nov 14

  Home Financing Options for People with Poor Credit

  In this tough economy, it’s hard to keep your credit rating as high as you’d like it to be, and only a few financial mistakes on your record can compromise your ability to finance a new home. If you’ve got less than stellar credit, here are a few financing options to investigate:

  • Federal Housing Authority Loans. In an effort to expand home ownership and give a boost to the real estate market, the government has begun offering federally funded mortgages to people with bad credit. While the terms of these loans may not necessarily be ideal, they’re one of the best ways to secure financing for your real estate investment if you’ve got a spotty credit score.

   

  • Secured Loans. Secured loans operate on the principal of collateral: you offer something of value to your lender in case you can’t pay your mortgage. As you can imagine, having to put up a vehicle or other valuables as collateral in order to finance your real estate investment isn’t the most desirable scenario, but lenders who are able to secure their investments will likely care much less about your financial history. Furthermore, since these types of loans are fully legal, you can take your lender to trial if things go awry.

   

  • Sub-Prime Mortgages. Sub-prime loans are mortgages which charge more interest than the prime rate. Specifically targeted towards people with bad credit, these mortgages will end up costing homeowners thousands more than the price of their real estate investment. Since the credit crunch of 2008, these loans have been harder to find, and even if you do manage to find a lender willing to finance your real estate investment at a sub-prime rate, it’s better to shop around for other financing options before signing on the dotted line.

  As you can see, the mortgage options for people with bad credit are extremely limited. While it’s always a good idea to build up your credit score before applying for a home loan, if you need to find financing for your house immediately, there are ways to do it. While an FHA loan is probably your best bet for securing a mortgage, don’t be afraid to apply for a secured loan – as long as you’re sure the lender is legitimate.

  Tags: mortgage, real estate investment
  Posted in Financing | No Comments »

• Nov 10

  Flipping Houses: Dealing with Taxes

  Rehabbing properties isn’t cheap, and taxes are one of the main reasons. The fees you incur by simply holding the title of a property can be enough to put some people out of the house-flipping business for good. However, as painful as taxes can be, they can be manageable if you’re willing to educate yourself. Here are a few things anyone flipping houses should know:

   

  • The Difference between Businesses and Investments. Depending on how successful you are at rehabbing properties, you may be subject to a more severe tax bracket. Fixing up and selling just one house is considered an investment subject only to property taxes, but if you flip two or more houses in a year, the IRS will notice and might force you to start thinking about your flipping hobby as a business instead. The difference? You’ll also have to start paying income taxes, a 15% self-employment tax and other costly fees. Therefore, if rehabbing properties isn’t your primary source of income, you may want to “space out” your projects a bit in order to stay under the radar.

   

  • The 1031 Form is Your Friend. While it’s a good idea for occasional flippers to fly under the radar, anyone who turns over more than five houses a year can save thousands of dollars by listing their homes as 1031 exchanges. A 1031 is a “like-kind” exchange, which means that one property is exchanged, free of taxes, for another. While you don’t literally have to trade houses with your buyers, you will have to invest all of your earnings from a sale into another piece of real estate within days of closing – which is why this technique is only recommended for who always have a project to work on.

   

  • Deduct, Deduct, Deduct. No matter how the IRS classifies your flipping hobby, you can still save a bundle every year by deducting all of your rehabbing costs as business expenses on tax day. Since the IRS is familiar with unscrupulous flippers exaggerating these expenses, you’ll want to make sure that you keep all of your receipts to back up your claims in the event of an audit. As long as you make sure to keep good records, you’ll come out clean and thousands of dollars ahead when April’s over.

   

  Taxes are definitely a pain when it comes to rehabbing properties, but if you take these steps to keep them in check, you shouldn’t have any problem making an honest profit. As long as you keep good records and flip houses at an appropriate pace, filing for your return will be even easier than they make it look on television.

  Tags: buying a home, home taxes
  Posted in Financing, Home Buying | No Comments »

• Oct 31

  4 Ways to Reduce Your Home Loan Interest Rate

  A mortgage’s interest rate is the most important variable to consider when financing a new home. The percentage of your loan that you pay in interest could mean the difference between spending a thousand and tens of thousands more than your real estate investment’s sale price. As a result, you should take every step you can to get a low interest rate. Here are four ways to get started:

  1)    Pay off Your Debts. Your credit score is probably the most important factor in calculating your mortgage interest. As a result, you should take every step you can to maximize it before applying for financing. The quickest way to give your score a much-needed boost is to pay off any outstanding debts you may have. You may have to make some sacrifices to pay off your bills, but it will be worth it in the long run.

   

  2)    Stack Your Accounts. If you’ve got some money you’re keeping out of the banks, now’s a good time to pad your accounts with a temporary deposit. Lenders will take a close look at your finances before approving your interest rate, and the more money you have available to show them, the better.

   

  3)    Borrow as Little as Possible. Another major variable in determining the interest for your home loan is the size of the loan itself. Homeowners who borrow less are more likely to get a favorable interest rate, so try to put as much of your own money as you can towards the purchase of your real estate investment.

   

  4)    Build Good Credit. Even if you don’t have debts that you need to pay off, your credit score can always afford to be higher. The best way to build a good credit rating is to swipe your card as often as possible and pay all of your bills on time. Spending frequently without carrying a balance for a few months will do wonders to the interest rate lenders offer you on your mortgage.

  The steps you need to take to reduce your mortgage interest aren’t just healthy for homeowners – they’re a good idea for everyone. If you’re buying a house, you should prove to lenders that you’re a responsible consumer. When you do, you won’t just save money on your mortgage, you’ll save money for the rest of your life.

  Tags: financing, reduce mortgage rate
  Posted in Financing | No Comments »

• Oct 16

  4 Ways to Keep Your Mortgage in Check

  With foreclosures at a record high across the country, it’s more important than ever to stay on top of your home loan payments. Here are a few ways you can simplify the process to keep your mortgage payments organized and up-to-date:

  1)    Mark the calendar. Don’t wait until your bill arrives to make sure you’ve got enough in the bank to make your mortgage payments every month. On your calendar, highlight the day your payments are due so that you can prepare your finances beforehand. Keeping your pay-dates scheduled will help you stay organized, on time and responsible.

   

  2)    Put it away on payday. As soon as you receive your paycheck, you should deduct your mortgage payment for the month and put it in a secure account or location. If you make sure to put the money away as soon as you receive it, you can ensure that you’re able to make your payments on time no matter what happens.

   

  3)    Modify your loan. If you know you’re going to miss a significant amount of work because of illness or a death in the family, don’t wait until it’s too late to refinance your mortgage. If you’re in good standing with your lender, they should be amenable to lowering your monthly payments for a period of time with the understanding that you’ll make up for it later. Many times people wait until foreclosure is imminent to try this, but refinancing is a preventive measure, not a reparative one.

   

  4)    Prioritize your debts. The best way to keep track of your mortgage is to create a debt hierarchy so you know which debts to pay off first. Because foreclosures are so rampant, your mortgage should be near the top of the list every month to make sure that your real estate investment is secure.

  Organization is the key to staying on top of your mortgage. As long as you keep your finances and bills neatly sorted, finding the money for your monthly loan payments should be simple and easy.

  Tags: financing, home mortgage, mortgage
  Posted in Financing | No Comments »